48 Unit Section 8 IA

48-unit HUD Section 8 complex locationed in Iowa.

The selling entity was a long term owner/operator and had dozens of HUD properties across the US. They have been selling all of their properties the last handful of years, this was the last one they owned! (Kept the best for last we think!).

Overall at purchase the property itself was operating extremely well. Historical occupancy was near 100%, with no major repairs needed! The current owner was not involved with oversite over operations at all, there was some major opportunity to decrease expenses to boost the NOI.

Here is a quick summary of our implementation after purchase:

At purchase there was is a full-time maintenance person, and a full-time on-site manager. For a stabilized 48-unit complex it does not need near this amount of staffing. We immediately hired a new maintenance man part-time. We have another property in the same general area, so we are able to share his workload with our other property. We also immediately changed the on-site manager to also manage several other properties in the area, spreading out this expense as well.

A few other changes
—> Install temperature limiting thermostats in all units. Heat expense savings in the winter!
—> Install LED lighting throughout the property.
—> Renegotiate lawn/landscaping contracts with the current providers.
—> Implement better systems for maintenance/unit turns to continue to keep occupancy high.

Hold duration: Long term hold 10+ years.

Purchase Details:

Price: $1,900,000
Occupancy: 98%
Monthly Revenue: $45,000
NOI: $170,000
Appraised value: $2,500,000

Projected Financials:
Occupancy: 98%+
Monthly Revenue: $47,000+
NOI: $250,000+
Valuation at 9 cap rate: $2,780,000+

Equity generated: $888,000+